The Federal National Mortgage Association is making it easier for borrower to cancel mortgage insurance through valuation alternatives and looser loan-to-value ratios.
Fannie Mae has updated its requirements for the process of evaluating borrower-initiated requests for mortgage insurance termination.
According to the Washington-based firm, the new requirements will lead to a better customer experience for both servicers and borrowers.
The secondary lender described the updates in Lender Letter LL-2018-03.
On requests for termination based on the original property value, Fannie will allow the use of its Automated Property Service to verify the current value. As a result, servicers will no longer need to warrant property value.
If the request is based on the current value, the government-controlled enterprise will allow broker-price opinions through its Valuation Management System.
When the current value is based on property improvements, the LTV threshold is being raised to 80 percent from 75 percent. Examples of substantial improvements are being provided.
Fannie will allow a borrower-initiated termination to be evaluated based on a written or verbal request.
“Servicers are encouraged to implement these policy changes as early as APS and VMS become available on Jan. 1, 2019, the letter stated. “However, servicers are required to implement these changes by March 1, 2019, unless otherwise noted in this lender letter.”
